Co-Living Property Investment
A co-living property investment follows the same principles as a traditional investment property. However, it is purpose-built to support three to five individual tenants rather than a single lease to meet the demands of the Australian rental market, creating a high-yield, cash-flow-positive investment. At The Melbourne Mortgage Company, our team is ready to help you reach your financial goals and guide you on investing in co-living effectively. Our experienced brokers in Melbourne have strong relationships with top lenders in Australia, ensuring a smooth journey from application to settlement.
With TMMC, you can get the right financing for your co-living property investment!
Why Invest in Co-Living Properties?
A co-living property offers three to five separate tenancies within one purpose-built space. Each tenant enjoys a private bedroom with an ensuite alongside shared amenities like a living area and kitchen. This is ideal for young professionals, millennials, and people looking for more flexible and affordable housing options in Australia.
Co-living is a modern solution that presents strong investment opportunities with low risk, driven by rising rental demand and a shortage of affordable housing in Australia. This innovative housing model maximises rental income, allowing investors to earn from multiple tenants on a single property while maintaining the flexibility to sell the property to owner-occupiers or multi-generational families in the future.
Key Benefits of Co-Living Property Investment
Multiple Streams of Income & Low Vacancy Risk
In a co-living property, each tenant has a rental agreement. So, if you have five to six tenants in a single property, you will benefit from multiple income streams. This diversified rental income means consistent cash flow, even if one tenant moves out.
Higher Tax Depreciation Benefits
A co-living home includes features and benefits not available in traditional homes, enabling higher tax depreciation deductions. More deductions mean a lower taxable income, which equates to reduced taxes. Additional savings from tax depreciation will further improve your cash flow, putting more money back in your pocket.
Improved Cash Flow for Future Investments
The positive cash flow generated from co-living properties means you have more income in your pocket for further investment opportunities. The higher the income, the more you can leverage on your next investment. Having a good balance sheet allows you to borrow more & faster and start building your property portfolio.
Higher Rental Returns
Co-living properties can offer 50% more in rental returns than a standard rental, making every square metre work for an income. By creating shared living spaces, these properties also foster a sense of community, attracting various types of tenants.
Capital Growth Opportunity
By investing in co-living homes, you stand to secure a property in a high-demand location with a low supply. As demand rises, so does your investment with long-term capital growth, offering a stable, cost-effective addition to your portfolio while addressing modern housing needs.
Cash Flow Positive
Co-living housing is the best in terms of positive cash flow right from day one, as higher rental income compared with traditional properties can boost your financial position and increase your borrowing capacity. This will help banks lend to you sooner for your next investment.
The Numbers: Co-Living Investment vs Traditional Rental
To illustrate the difference between traditional rental and co-living investment, let’s consider a hypothetical example in Melbourne.
In the first scenario, we have a traditional rental setup. The property is bought at $800,000, with a weekly rent of $550. This translates into an annual rental income of $28,600, resulting in a gross rental yield of 3.57%.
In contrast, the second scenario is co-living housing. The purchase price remains $800,000, assuming no major modifications are needed. However, each room is rented out at $320 per week in this scenario. With four rooms available, the combined weekly income reaches $1,280. This leads to an impressive annual rental income of $66,560 or a gross rental yield of 8.32%—which is way higher than a traditional rental home.
Invest in Co-Living Housing in Australia with TMMC
Our knowledge of Melbourne’s real estate landscape makes us the best Melbourne mortgage broker to obtain financing for your co-living investment. We have access to home loans suitable for co-living investments and a network of specialised lenders who understand that co-living properties for sale have high rental yield potential.
Maximise Your Borrowing Capacity
As an investor in co-living, you can borrow up to 80% LVR for both construction and established properties. Most co-living loans require a commercial valuation, often giving higher loan amounts based on projected rental income. We work closely with valuers and lenders who understand the co-living market to make sure your property is correctly valued and your borrowing capacity maximised.
Flexible Solutions for Co-Living Investment
At TMMC, we offers innovative loan solutions for co-living investments, ensuring the terms are flexible to suit your financial situation. We will guide you through complex paperwork, minimise fees, and help secure a loan that aligns with your investment goals.
Zero Upfront Cash – Access Your Equity
Through TMMC, you can access home equity to invest in co-living properties with zero upfront cash. You can jumpstart your investment journey and save thousands in interest costs by leveraging the equity in your home. In today’s rising interest rate environment and increasing cost of living, a home loan with no monthly payments could be the tool you can utilise to maximise your returns on co-living investments.
SMSF Investment for Co-Living Homes
Take advantage of your superannuation with our co-living homes investment plan. This allows you to use your super to invest in co-living properties, intending to maximise returns for your financial future. Keep in mind that SMSF loans for co-living properties require careful structuring to maintain compliance. Consult with our SMSF Loan Experts to find the best solution for you.
Speak to Your Melbourne Mortgage Broker Experts Today
At The Melbourne Mortgage Company, our team will guide you through the process of financing a co-living property.
Contact us for a free consultation. Count on us to look for a loan that’s right for you and your co-living investment goals, not the lender.